Mid-week news roundup: HarmonyCares $200M round, Risant to buy Cone Health, Courier Health’s $16.5M Series A; Coalition for Health AI loses HHS/FDA members; Weekend Read–reining in AI’s Wild West?

July 11, 2024 | by

In further Signs Of Life in healthcare funding and acquisitions:

In-home primary care provider HarmonyCares obtained $200 million in an unlettered round. Lead investors are General Catalyst, McKesson Ventures, and interestingly, an unnamed large national payer. Other investors are K2 HealthVentures with existing investors Rubicon Founders, Valtruis, HLM Capital, and Oak HC/FT. HarmonyCares provides in-home primary care to 70,000 patients in 15 states via 175-plus providers. Care teams include nurse care managers, social workers, and pharmacists, reinforced by 24-7 on-call support. The integrated model serves higher-needs patients through value-based care partnerships with Medicare Advantage plans and Medicare ACO programs via Centene, Aetna, and others. The fresh funding will be used for market expansion and scale up new technology for clinical outcomes and patient satisfaction. The company was founded as US Medical Management in 2013, became majority owned by Centene Corporation, which then sold it off as part of their 2021 divestitures. Release, FierceHealthcare, MedCityNews

Risant Health, the nonprofit/community-based hospital system initiative of Kaiser, intends to acquire Cone Health of Greensboro, North Carolina. Cone has five hospitals and an insurance plan. Purchase price was not disclosed, but Cone’s 2023 operating revenue was $2.8 billion. Closing the deal is dependent on the usual approvals. Cone plans to continue to operate independently. It is the second of five planned acquisitions with a $5 billion war chest that kicked off with Pennsylvania-based Geisinger that closed in April, The systems are being chosen for value-based care and population health models–as well as financial health and geographic expansion. Geisinger added $4.6 billion in a one-time gain to Kaiser’s bottom line last quarter.  MedCityNews, Healthcare Dive

Geisinger also experienced a massive data breach initiated by a former Nuance Communications employee that potentially exposed 1.2 million records. While it took place in late 2023, it was reported only last week. TTA 2 July

Courier Health added a $16.5 million Series A from Norwest Venture Partners and existing investor Work-Bench to its existing $4 million in seed funding. NYC-based Courier is a customer relationship management (CRM) platform to manage specialty medications across the patient journey, coordinating information for biopharma companies from patients and providers for field access, patient services, and marketing teams. Release, Endpoints

The Coalition for Health AI (CHAI) is losing two members out of HHS: Micky Tripathi and Troy Tazbaz. They were named in March to the CHAI board of directors as non-voting Federal liaisons. Both withdrew from the BOD due to potential Federal regulatory conflicts surfaced by Congress with this primarily private and for-profit organization. Dr. Tripathi is head of the Office of the National Coordinator for Health Information Technology (ONC-HIT) and Acting Chief Artificial Intelligence Officer at the US Department of Health and Human Services (HHS). Mr. Tazbaz is Director of the Digital Health Center of Excellence (DHCoE) at FDA. An FDA spokesperson told Healthcare Dive that Mr. Tazbaz is stepping down after the agency decided it no longer needed to participate in CHAI as a non-voting member. Hmmmm…..

Weekend Read: despite CHAI and other well-meaning agencies, including Federal, AI still resembles The Wild West. The author of this MedCityNews influencer piece points out that a faulty algorithm can make the difference between life and death. While he credits AI scribes for lightening provider load, AI is no quick fix or a bucket of cherries. FTA:

  • Bold claims abound but aren’t backed up by clinical research or regulatory oversight
  • Healthcare has become saturated with AI solutions that blur the line between what’s regulated and what isn’t. Clinicians have been left in the dark and are pushing back–the nurses’ protest against Kaiser is but one example.
  • AI development should be viewed through a regulatory-grade lens. The ability to demonstrate that a solution is positively impacting the care of a patient and not creating patient safety issues is crucial.
  • Clinical AI needs to go through the FDA approval process and developers need to understand that process.
  • The solution is not there to replace the clinician

Of course, this is all happening as healthcare is targeted by ransomware bad actors–and while health systems are laying off experienced IT staff, who have to be part of this evaluation. The above-mentioned Kaiser laid off well over a hundred in the past few months. Becker’s

Two debuts of note: Samsung’s Galaxy Ring, Watch upgrades; Alivecor’s InstantQT+KardiaMobile 6L Europe launch

July 10, 2024 | by

Samsung’s big reveal at Unpacked in Paris today was the new Galaxy Ring device and health enhancements to the Galaxy Watch. Lots of health tracking features powered by Galaxy AI are packed into both that work best (of course) in the Samsung Health ecosystem, such as ring and watch together with Galaxy phones. General availability is 24 July. A topline review:

Galaxy Ring

–Accelerometer, optical heart rate sensor (including green, red, and infrared LEDs), and skin temperature sensor
–Sleep monitoring: movement during sleep, sleep latency, heart and respiratory rate. Quality of sleep analysis.
–Menstrual cycle via skin temperature tracking.
–Heart rate when unusually high or low, plus real time heart rate checking
–Exercise and the kind of workout or activity a person is doing
–Pricing at $399.99, available today at Samsung, Amazon, and Best Buy today, all other retailers 24 July. Size of ring is around 2.3 to 3 grams, depending on ring size (Samsung provides sizers). It’s also charged in a special dock and a single charge can last up to seven days.

Galaxy Watch 7 ($299) and Galaxy Watch Ultra (for athletes, $649)

–BioActive sensors for preventative care, capabilities to obtain more accurate health measurements, advanced athletic tracking capabilities and an emergency siren.
–Modifications to the photodiodes for more accurate data capture
–Blood oxygen levels, sleep quality, stress levels, heart rate

Data from both the Ring and Watch tie into Samsung Health apps that monitor blood pressure (CE Marked for EU), FDA-cleared ECG, and de novo clearance for detecting signs of sleep apnea. There is also a biomarker index, Advanced Glycation End Products (AGEs) Index, that indicates metabolic health and biological age markers.

More details: CNBC, The Verge, Mobihealthnews, Samsung release

Alivecor launches InstantQT in Europe. Used with Alivecor’s KardiaMobile 6L device and the KardiaStation app, InstantQT remotely records a point-of-care ECG and evaluates patients for potential cardiac abnormalities – all in less than one minute.  QT represents the time it takes for the heart muscle to contract and then recover (the electrical activity between the Q and T waves). Many medications can prolong that time leading to arrhythmias and potentially sudden heart failure. For monitoring those on antipsychotic medications and some cancer treatments, the quick evaluation by the patient using the KardiaMobile 6L device with the KardiaStation professional app can be performed on iOS devices. The InstantQT measurements are made using the EK12 ECG algorithm from GE HealthCare. Release

 

News roundup: Masimo has offer to JV consumer business for $950M or more, Get Well sold to SAI, One Medical scored on poor handling of urgent calls from Iora patients

July 10, 2024 | by

Slow early July? Not quite.

Masimo’s maneuvering continues with a potential $950 million offer to buy into its consumer audio and health business. The unnamed offeree listed in Masimo’s latest Form 8-K is a potential joint venture (JV) investor negotiating with Masimo since 7 May. Masimo would sell off the majority stake of its consumer audio and consumer health businesses to the partner, that would make 1) a cash payment to Masimo and 2) contribute cash. The 2 July update confirms that the potential partner is offering in the range of $850 million to $950 million on a cash and debt free basis. It’s by no means a done deal as Masimo is pressing for more cash and for retaining certain intellectual property rights. For instance, Masimo’s IP would be for use solely within the consumer field, not healthcare. The Apple litigation on IP infringement on their pulse oximetry (SpO2) sensors and software would remain with Masimo.

The consumer audio business would include the international audio brands acquired in the $1 billion buy of Sound United in 2022: Bowers & Wilkins, Denon, Polk Audio, Marantz, Definitive Technology, Classé, and Boston Acoustics. Their consumer healthcare includes smartwatches and the Stork baby monitor.  MedTechDive

This is an interesting Act 3 Curtain Raiser to Masimo’s ongoing proxy fight with ‘activist investor’ Politan Capital Management, which is attempting to take two more seats on the board of directors and wrest control from the current board controlled by CEO/founder Joe Kiani. Hundreds of Masimo staff have threatened to resign if Politan takes over. The shareholder meeting is on 25 July. TTA 2 July

Get Well, a patient engagement platform, has been acquired by SAIGroup for an undisclosed amount. Get Well serves health plans and systems with patient engagement at point of care, digital care plans, and AI-enabled care navigation. SAI will integrate their existing advanced predictive + generative Eureka AI platform into Get Well’s offerings. SAIGroup has two other AI-related companies in its portfolio: ConcertAI and generative AI RhythmX AI. Michael O’Neil will continue as Get Well Founder and CEO. Release    Hat tip to HIStalk 7/10/24

A story highly critical of Amazon’s One Medical broke over the holiday weekend with a PBS News story about patients put at risk by sloppy call handling. The patients were former Iora Health members, acquired with One Medical, who are older 65+ adults in Medicare Advantage and Medicare Shared Savings Programs (MSSP) ACOs including the advanced ACO REACH model. In March, calls to Iora Health offices were shifted to what Amazon termed ‘mission control’ in Tempe, Arizona. The call center reps did not have access to their records and were not medically trained. The patients were calling with acute symptoms–one of 17 ‘red flag’ symptoms such as symptoms of a blood clot, sudden rib pain, stomach pain and blood in their stool. At the call center, they were not triaged to immediate assistance and instead were given appointments later that day or later in the week. Amazon is claiming that as far as they know, no patients were harmed. Becker’s

As TTA backgrounded on 6 March, the former Iora offices were rebranded, if not closed, as One Medical Senior and they would shift to existing One Medical offices. FTA: Existing patients, many with multiple chronic conditions, reported cutbacks in callbacks, appointment length, physician load, and services provided such as transportation. One clinic had 20 staff cut back to five with patients pushed out to virtual visits–hardly appropriate for a high needs, older, less technologically savvy patient population in value-based care, quality-measured models.

How will these high care needs patients in tightly monitored, intensive programs such as MA and ACO REACH, mesh with the cheap efficient approach that Amazon takes with everything–including One Medical?

VA sued in Federal court on Oracle Cerner EHR accessibility issues

July 8, 2024 | by

What you may have missed over the holiday–another one to add to the VA’s Mound of Misery with the Oracle Cerner rollout. The Department of Veterans Affairs (VA) is being sued on the choice of Oracle Cerner as the successor to VistA and its inability to accommodate Federal accessibility requirements. The new EHR apparently does not accommodate assistive technology, such as screen readers that enable the visually impaired to read and direct input on computer screens and thus perform their work. The lawsuit was filed on 21 June in the US Federal District Court for the District of Columbia by Laurette Santos, a clinical social worker at VA’s White City, Oregon, facility.

Ms. Santos is a 10+ year veteran of the VA. In her job as Visual Impairment Services Team (VIST) Coordinator since 2019, she relies on the Job Access With Speech (JAWS) screen reader application. Like the veterans she counsels, she is also legally blind and has been since 1988.  She requires access to the EHR in order to obtain veterans’ histories, determine their needs, and input notes. JAWS converts the screens into spoken words (or Braille output through a connected device) and allows blind users to access and interact with applications using the computer keyboard. In planning for the Oracle Cerner transition in June of 2022, she reported in 2019 that the JAWS screen reader did not work with the new EHR and didn’t even allow her to sign in. At work, she continues to use VistA in a read-write-only format but cannot use Oracle Cerner and must delegate tasks to sighted employees. Bottom line, she cannot independently perform her work whereas previously she was able.

The lawsuit charges that the VA did not ensure that the Oracle Cerner EHR complied with the Section 508 accessibility standards per the contract and that it worked before its implementation. Section 508 has been part of every Federal contract since 1998, when the Rehabilitation Act of 1973 was amended to make electronic and information technology accessible to people with disabilities. Between November 2020 and November 2021, the VA’s Section 508 Office conducted several audits and found the Cerner EHR was inaccessible. The lawsuit alleges that this constitutes ongoing violations of both Section 508 and Section 501 of the Rehabilitation Act; Section 501 prohibits discrimination against individuals with disabilities. Veterans also cannot use features tied into Oracle Cerner as they are non-compliant.

In the lawsuit, Ms. Santos is represented by The National Federation of the Blind and Brown Goldstein & Levy partners Eve Hill and Chelsea Crawford. The VA does not comment on pending litigation. HIT Consultant, Federal News Network

Done Global Federal probe expands to five more people; company suspended from Google, TikTok ad platforms

July 3, 2024 | by

The first telemedicine prescribing Federal prosecution adds charges against five additional employees. The charges are similar to those for Ruthia He, the founder/CEO, and David Brody, listed as the clinical president of Done Global (Done)–providing easy online teleprescription access to Adderall and other Schedule II stimulants, skirting the normal restrictions provided in the Controlled Substances Act (CSA) and other regulations [TTA 19 June].

These new charges center on an alleged scheme to defraud federal health care benefit programs including Medicare and Medicaid and are part of the Department of Justice’s 2024 National Health Care Fraud Enforcement Action.

Those charged are Riley Levy, 30, Done’s executive leader, operations and strategy; prescribers Christopher Lucchese, DO, 58; and nurse practitioners Yina Cruz, 37, Katrina Pratcher, 70, and Erin Kim, 54. Levy, Lucchese, Cruz, and Pratcher were charged in the Northern District of California (US Attorney’s office release). Erin Kim was charged in the Middle District of Florida (Case Summary). 

Prescribers were paid based on initial consultations–if they took place–then auto-refills without follow up. Prescribers are also charged with writing prescriptions where Adderall, for instance, was not medically necessary and issued to people who did not have ADHD. Follow up meetings were not compensated and frowned upon.

  • Nurse-practitioner Erin Kim from Florida prescribed over 1.5 million pills since 2021 and earned over $800,000. Done’s system with auto refills even prescribed to patients who had died. As of the end of May, her patient roster was still over 1,100.
  • Nurse-practitioner Yina Cruz from New Jersey made about $20,000 a month prescribing primarily stimulants to 2,300 patients, according to a 2022 interview with The Wall Street Journal. She renewed prescriptions based on forms patients filled out online, sometimes as fast as two renewals a minute. 

Done didn’t respond to a request for comment from the WSJ. A spokesman for the founder, Ruthia He, said she hasn’t entered a plea. The senior doctor, David Brody, has pleaded not guilty. Done maintains a statement on its website of disagreement with the charges and continuance of normal operations.

Done Global knocked off of TikTok and Google ad services–but not Meta. In 2022, Done lost certification by LegitScript, a clearance service for telehealth companies. Advertising continued on Google, Meta, and TikTok into June. Last week, Google and TikTok told the WSJ that Done was suspended. Advertising continues on Meta (Facebook) as long as the ads promote a service, not prescription drugs. The numbers in a suffering online ad market aren’t small, either. Done spent $7 million on Meta ads since November 2022, $20 million on Google, and about $3 million on TikTok ads. based on documents reviewed by the WSJ. Wall Street Journal, The San Francisco Standard

Short takes: Fabric buys Walmart’s MeMD telehealth arm, Geisinger data breach via vendor exposed ~1.2M records, UK’s Careium develops resilient rSIM, $50M funding for K Health, India’s Alyve’s $6M Series A, Upside Health closes

July 2, 2024 | by

Walmart Health’s virtual care telehealth services, originally known as MeMD, sold to care enablement/workflow integrator Fabric. The transaction is effective immediately though no purchase price, management transition, or change in website were disclosed. The sale is no surprise as Walmart Health in shutting their clinics starting at end of May depicted the shutdown as total, lambasting low reimbursement and the cost of business as factoring into an unsustainable model. Fabric, based in NYC, uses conversational AI to triage patients, evaluate with decision support, and optimize resource allocation and patient flow.

Fabric claims that MeMD has 30,000 corporate, institutional, and health plan partners and 5 million members, Walmart bought it for an undisclosed amount in May 2021 during the telehealth boom. It expanded to include not only urgent care, but men’s and women’s health issue support, mental health and psychiatric support. Fabric’s funding since their founding in 2021 as Florence Labs is $80 million, the most recent a February Series A round of $60 million with General Catalyst, Thrive Capital, GV (Google Ventures), and four others. They bought a telehealth Ur-company, Zipnosis, from then-Bright Health in May 2023 [TTA 24 May 2023] and GYANT, an AI-assisted enablement company, in January. Release, Mobihealthnews

Geisinger, the lead health system within Kaiser Permanente’s Risant Health, experienced a data breach that potentially exposed 1.2 million records. The former employee of Nuance Communications, an IT provider in clinical documentation, accessed records two days after his termination. Geisinger discovered the breach on 29 November 2023, Because of the ongoing investigation, patients were not notified until 24 June.

Breached information varies by patient, but it included names combined with one or more of the following: date of birth, address, admit and discharge or transfer code, medical record number, race, gender, phone number and facility name abbreviation. No claims or insurance information, credit card or bank account numbers, other financial information, or Social Security numbers were accessed.

The former Nuance employee has been arrested and is facing federal charges. Nuance had no comment. Release, Healthcare Dive

In an important development for the UK’s rapidly implementing digital switchover, now extended to January 2027, Careium has developed an ‘intelligent’ SIM card for devices. It partnered with CSL to develop a “resilient’ rSIM that actively monitors connectivity and will switch either profile for maximum uptime on all UK networks. rSIM is available for all Careium 4G products in the Eliza smartcare hub and is compatible with current devices. Careium is marketed and covers about 400,000 seniors in the UK, Sweden, Norway, the Netherlands, Germany, and France.  Release

Two fundings of note–and one shutdown:

K Health, a NYC-based digital primary care startup, received $50 million in venture round funding from lead investor Claure Group. Additional investors were Pablo Legorreta, founder and CEO of Royalty Pharma, Mangrove Capital Partners, Valor Equity Partners and Atreides Management LP. Total funding to date is over $380 million through a Series E plus two venture rounds. Valuation is estimated at $900 million. K Health supports users through an app with AI-assisted diagnostics as well as partnerships with leading health systems in 48 states including Cedars-Sinai and health plans Elevance and UnitedHealthCare. Conditions supported are primary care, weight management, urgent care, and mental health. Release, FierceHealthcare

Alyve Health, a Mumbai, India-based digital health provider, raised a Series A of $5,5 million. It was led by Axilor Ventures with participants 1Crowd Fund, InHealth Ventures, and Trifecta Capital. Alyve provides services to corporate markets to simplify the health plan experience for members across multiple healthcare experiences such as doctor consultations, diagnostics, medicine purchases, dental procedures, gym memberships, and proactive well-being. According to the release, the raise will be used to improve its data, security, and AI capabilities, as well as expand operations, hire more talent, and enhance services. Mobihealthnews

Pain management technology company Upside Health closed. Founder Rachel Trobman posted the closure on her personal feed on LinkedIn. Their Branch Health app helped chronic pain sufferers better manage their pain and connected them to clinical and educational resources. Their website and LinkedIn pages are shuttered. According to her post, they had a base of 30,000 patients. Their funding listed on Crunchbase was $635,000.

Follow up roundup: Amwell to reverse stock split to avoid delisting (updated), Amazon Clinic folded into One Medical, Amedisys divesting to close UHG deal, latest on Steward Health’s antics and $7M spying, Masimo’s shareholder fight (latest)

July 2, 2024 | by

Amwell will reverse stock split to fix their pending delisting on the NYSE. The board of directors approved on 28 June a 1 for 20 reverse split. This will remedy their non-compliance with NYSE regulations requiring an average closing price of above $1.00 over a consecutive 30 trading-day period [TTA 5 Apr]. Shareholders approved the move at their meeting on 18 June. The NYSE notice was given on 2 April and the reverse split will happen at the market open on 11 July, well within the six-month window. Amwell Class A shares closed yesterday at $0.27 so that condensing 20 shares will bring the share price around $5.40. Amwell’s 2024 is forecast with revenue in the range of $259 to $269 million and adjusted EBITDA in the (less) red between ($160) million to ($155) million, with no breakeven in sight until 2026. Their Q1 posted a $73.4 million net loss. Amwell has also released 10% of staff since the palmier days of 2023. Amwell, like Teladoc, continues to struggle in a stand-alone urgent care model that is now obsolete. Release, Healthcare Dive

Update 11 July: Amwell shares opened today at $6.52, and as of midday were trading at $7.51. So short term, the reverse split is working to plump up the shares.

Amazon says goodbye to Amazon Clinic by folding it into One Medical. This should come as no surprise to Readers who noted the  May departure of Clinic’s general manager Nworah Ayogu, MD to VC Thrive Capital with no replacement or search. Amazon’s announcement on 27 June was typically upbeat in renaming the service as One Medical’s Pay-per-visit telehealth. The improvements they claim are:

  • Pay-per-visit telehealth for 30+ common but minor conditions, like pink eye, the flu, or a sinus infection
  • A One Medical monthly or annual membership plan that includes on-demand virtual care and same or next-day appointments at 150+ One Medical primary care offices
  • More affordable–messaging/asynchronous visits are now $29, formerly $35, and video visits at $49, formerly $75. 

The catch–existing Clinic members have to log into One Medical to access their records and the service. Amazon is also propping up One Medical through Prime membership, offering a better deal at $99/year and non-Prime individuals for $199 per year. Amazon does not disclose users, growth, or revenue for either Clinic or One Medical. Healthcare Dive

The long-delayed UnitedHealth-Amedisys home health deal moves closer to closing. Amedisys and UHG’s home health operation under Optum will be divesting some of their locations to VitalCaring Group to avoid Department of Justice anti-trust concerns. The divestiture is contingent on the acquisition closing, now projected in second half of this year. The number of locations was not disclosed though earlier speculation had estimated it at 100. UHG’s offer to acquire Amedisys was made in June 2023 for $3.3 billion in an all-cash deal. It would be additive to its earlier $5.4 billion buy of LHC Group, now part of Optum. With the divestiture, analysts do not see any impediments to a closing, though it had faced opposition in Oregon in March and DOJ opposition since it was announced. This Editor remains sanguine about a successful closing. After UHG won versus DOJ in the Change Healthcare acquisition, “DOJ has a long memory, a Paul Bunyan-sized ax to grind, and doesn’t like losing.” Expect a few more impediments tossed in their direction over the next months. FierceHealthcare , Zack’s Research

The latest episodes in the continuing soap opera of Steward Health involve both Optum and James Bond moves on their critics. Optum had offered back in March to buy their practice groups under Stewardship Health, which stalled with first the Massachusetts Health Policy Commission (HPC), then their bankruptcy. That offer is now off, leaving Steward in the lurch. It was critical to $75 million of Steward’s debtor-in-possession (DIP) financing as recently as 13 June [TTA 14 June]. The deal would have been problematic anyway for Optum as they are under DOJ scrutiny not only for Amedisys but also because Optum controls or has arrangements with 10% of US physicians, 90,000 to date. Healthcare Dive They also settled recently with DOJ for $20 million on Optum Rx’s filling orders from a mail-order pharmacy in Carlsbad, California between 2013 and 2015 for Schedule II drugs: opioids, benzodiazepines, and muscle relaxants. Healthcare Dive

Adding to Steward’s piles of misery are the latest revelations that Steward financed a $7 million spy operation on their critics. This loony aspect to the Steward endgame involved contracting with UK investigators on surveilling a critical former executive, a British financial analyst, and a Maltese politician to find compromising actions between 2018 and 2023. The investigations were allegedly authorized and prioritized by Steward’s top executives while Steward struggled to pay bills for its hospitals and practices. Payments to the investigators were routed through Steward’s Malta operation against their critics in Malta and elsewhere. Steward at the time was embroiled in a dispute around their management of hospitals in Malta, which was eventually investigated and terminated by a Maltese court last year.

One example: the UK firm Audere “collected embarrassing personal information and photographs of a former Steward employee after Steward feared he would leak financial information to its auditor.” Another was the investigation and harassment of a British financial analyst, Fraser Perring, critical of Steward’s actions in its dealings with Medical Properties Trust (MPT). He was followed, his home CCTV was disabled, his home was broken into, family members and his partner were followed. Perring was also being smeared on Twitter through an account set up by Audere. There is much more on this in OCCRP’s report, published (paywalled) in the Boston Globe and Times of Malta. OCCRP’s full report and findings are here. FierceHealthcare

Electronics, audio, and medical device company Masimo continues to fight a hostile activist investor, Politan Capital Management. In December 2023, Masimo notched a significant win via the International Trade Commission versus Apple’s Series 6 and later Watches that forced Apple to disable its pulse oximetry (SpO2) sensors and software that violated Masimo’s smartwatch patents [TTA 28 Dec 2023]. Politan descended on Masimo in April accusing CEO and chairman Joe Kiani and others of mismanagement, including the 2022 acquisition of Sound United’s audio brands. It won two seats on the Masimo board of directors at the last shareholders’ meeting and is demanding two more seats at this year’s meeting on 25 July which would give it effective control.

The latest in the proxy fight is that the chief operating officer, Bilal Muhsin, will depart after 24 years at Masimo if Joe Kiani is forced out. The brief conditional resignation was sent to Masimo’s lead independent director, Craig Reynolds. Mentioned in the resignation was that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. More letters like this may be coming as reportedly Masimo management has urged employees to sign similar letters. Strata-gee, MedTech Dive  

Politan was the investment group that upended Centene Corporation and ousted most of Centene’s board plus 25-year CEO Michael Neidorff in 2022 shortly before his death on 7 April 2022 [TTA 18 Dec 2021]

Update: 300 engineers in Masimo’s healthcare division expressed specific support for Joe Kiani against Politan and Quentin Koffey in an open letter. “We wish to convey our deepest concern if Quentin Koffey and Politan Capital take control and Joe Kiani is removed. We are committed to Masimo because of the vision and innovation he pushes and drives us to deliver. The prospect of losing our founder and CEO threatens to derail the progress we have made and jeopardize the future of Masimo.” They also expressed that they may leave. “We, the undersigned from Masimo Healthcare Engineering, wanted you to be aware that we may not continue with the company if Joe Kiani is replaced by Quentin Koffey and Politan Capital.” This follows on other letters written by international regional managers and presidents in June also stating their support and warning that they may leave if Kiani leaves. The annual shareholder meeting is scheduled for 25 July.   MedTech Dive

However, Masimo is also embattled on other fronts: earlier in June, DOJ and FDA announced their investigation of problems with their Rad-G and Rad-97 SpO2 devices leading to a recall and the SEC is investigating potential accounting irregularities and internal control deficiencies. MedTechDive

Walgreens gives up on VillageMD, will sell to reduce stake below majority, closing underperforming stores, revising profit outlook– and in abandoning Boots sale, managing director James quits

July 2, 2024 | by

Q3 results are in for Walgreens Boots Alliance (WBA) and it was largely a bummer, especially if you work for VillageMD. Their financials have taken a hit from crashing US consumer retail spending and the softening pharmacy business. Adjusted earnings per share (EPS) were $0.63, down 36.6% on a constant currency basis compared to Q3 last year. The full year guidance was lowered from Q2’s outlook of $3.20 to $3.35 EPS to $2.80 to $2.95, again citing US trends. Q3 sales were up 2.6% to $36.4 billion, up 2.5% versus last year. Release

Industry estimates are that fully one-quarter of Walgreens’ 8,700 US stores are being reviewed for performance and closure, based on industry estimates and Tim Wentworth’s remarks on the investor call last week. Healthcare Dive, FierceHealthcare

Mr. Market didn’t like the WBA news at all, dropping the share price from the call last week to today, closing at $11.58, its lowest level in years. Nine years ago, it traded just over $95 per share. Its consistently steady price and healthy dividend save the last couple of years gave it a broker nickname of a ‘widows and orphans’ stock.

The bad news for VillageMD is that it’s for sale. Walgreens plans to lower its ownership below a majority holding and not to grow that line of business, instead focusing on retail pharmacy. Lowering its ownership stake means it has to find a buyer or buyers for at least 14 points of its 63% share. And it’s been a money pit. It not only upped its share from about 30% to 63% in 2021 for $5.3 billion but subsidized the acquisition of Summit Health/CityMD by VillageMD in November 2022 for $8.9 billion ($3.5 billion from WBA). The rough calculation of $10 billion [TTA 28 Mar] spent under CEO Roz Brewer’s watch does make it a bit easier for CEO Tim Wentworth to slash away. 140 locations were closed by March with a total now estimated at 160.  

But where to find a buyer/investor? It won’t be Cigna. Last May, Cigna wrote off $1.8 billion of its 2022 $2.2 billion investment which gave it a ‘in the teens’ share [TTA 2 May]. WBA wrote it down as well; last quarter, a $12.4 billion non-cash impairment charge related to VillageMD goodwill netted a $5.8 billion writedown. It’s no moneymaker though its revenue this quarter grew 7%. An industry analyst estimated VillageMD’s 2023 losses at $800 million last April. Primary care is no longer a hot investment. Even mighty CVS is looking for a private equity investor in Oak Street Health, which implies that CVS doesn’t want to put more than the bare minimum into expanding OSH’s clinics [TTA 29 May].

This Editor’s own interesting take on an option. VillageMD’s new COO/president is a Centene ‘retiree’, Jim Miller. Previously, he had the same positions for two years at Magellan Health. He was there when it was acquired by Centene in 2022 and stayed on till retiring in April. Magellan’s holdings have largely been sold off since activist investor Politan stepped in [TTA 10 Apr]. Could it be that Miller may find investors to buy or spin it off and go private?

Shields Health not for sale and neither is Boots, which didn’t make the latter’s managing director happy. On the investor call, Wentworth also confirmed that specialty pharma operation Shields Health Solutions, bandied about as a sale candidate, will be retained. It grew 24% in Q3 versus year prior. Boots pharmacies in the UK will remain off the WBA selling block in another about-face. Right after last week’s investor call, Boots’ managing director Sebastian James announced his departure, effective in November (!) reportedly for a European eye surgery business. James had been with Boots as MD since 2018 and oversaw 13 consecutive quarters of market share growth including this one, with a 6% rise in UK comparable retail sales. It’s hard not to speculate that either James had lined up a buyer or he tired of the push me-pull you from management. Another factor that doesn’t inspire confidence. Morningstar UK

Wentworth continues to have a rough ride with some speculation as to why WBA continues to dig itself into a hole and when it will turn around.

Short takes/wrapup: fundings for Talkiatry, Heyday Health, CipherHealth; Brightside Health now 50 states for Medicare Part B; Neurabody’s sensor based posture therapy; below the radar global layoffs at Medtronic

June 27, 2024 | by

The funding spigot seems to be on, even up to a Series C.

Talkiatry closed a $130 million Series C for a total funding of $245 million. The round was led by Andreessen Horowitz (a16z) with participation from Perceptive Advisors. Debt financing was provided by Banc of California. Talkiatry’s offering in virtual behavioral or telemental health is psychiatrically-based with a national network of 300 psychiatrists performing to date over 1 million patient visits. Their differentiation is stronger outcomes and reduced utilization of higher levels of care. Their footprint is in health plans: Aetna, Blue Cross Blue Shield, United Healthcare, Cigna, and Humana, covering more than 70% of commercial lives in the US–but plans to expand to provider networks. Release, FierceHealthcare

Heyday Health‘s raise of $12.5 million was from Gradient Ventures (Google’s early stage fund), Lionbird, a large national payor, Great Oaks Capital, and Kate Ryder, CEO of Maven Clinic. Heyday’s technology provides 24/7 in-person’s home, telehealth, and phone visits for Medicare and Medicare Advantage beneficiaries in Ohio and Kentucky. Each person is connected to a personalized care team comprised of a physician, a nurse practitioner, and a Health Ally that works with them to design and manage care plans. The funding will be used for geographic expansion into the Cincinnati/Dayton area in Southwest Ohio and the Louisville area in Kentucky. Release, FierceHealthcare

CipherHealth received an undisclosed capital investment from Atalaya Capital Management for growth and expansion. Cipher provides communication solutions for patient engagement such as secure texting, appointment setting, rounding, and patient feedback. Release 

Brightside Health, another telemental health provider that had its own $33 million Series C in April, announced that it has expanded its reach to Medicare Part B recipients in all 50 states and the District of Columbia, making it the first and only telepsychiatry provider to do so. With this, they now have a total reach of 130 million covered lives. Older adults are an underserved market for mental health support, with 15% utilizing ERs for care, one in four recipients living with a mental illness, and those 65+ having the highest rate of suicidal ideation. Release

We don’t often hear of digital health coming out of Luxembourg, but startup Neurabody located there is combining sensor-based data with AI to address the causes of and therapy for lower back pain. The current Posture AI device is a smart posture estimation sensor and an optional posture correction ergonomic shirt that provides personalized feedback and advice on improving posture and reducing pain via a smartphone or tablet app. If the user begins to slouch, the sensor detects it and buzzes to remind the user to sit up straight. Future products in the next two years are a smart posture seat and smart lumbar support devices. Co-founder William Choi is a serial entrepreneur, an investor and founding member of BackJoy Orthotics, an Inc 500 Fastest Growing Company. Right now the app is available on Google Play and the Apple App Store. The shirts are listed at $149 but the sensor and chest strap are not listed for sale and the shirt purchase pages are not functional. The pages need some work (e.g. typos, ‘coming soon’ pages). Release

But layoffs are still with use, even for the powerful ‘giants’.

Med device giant Medtronic has been quietly proceeding with a global layoff. The only publications that have been on this are Mass Device, which initially was unable to receive confirmation but pursued, and the local Minneapolis Star-Tribune. The layoffs started in April and May, with posts from former employees on LinkedIn and on TheLayoff, which are coded in Medtronic-speak. The company confirmed earlier this month to the Strib that it was laying off staff but would not give details, from the number of employees affected to impacted business divisions or geographic locations.

At the end of 2023, Medtronic offered employees an early retirement program, usually a first sign of major layoffs. Then, at the start of 2024, Medtronic announced the closure of five manufacturing plants and six distribution centers as part of an effort to improve the company’s supply chain, but again refused to disclose where or when. Medtronic relocated to Dublin years ago but maintains an operational HQ near Minneapolis. 11,000 employees of 90,000 total work there, making Medtronic the world’s largest medical device company and still a major employer in Minnesota. None of the layoffs are showing up on state WARN sites either because they are below the thresholds or Medtronic is simply not filing, though states do not except foreign companies.

Did they really think that they could keep this on the QT and Strictly Hush-Hush in the age of social media and layoff trackers (apologies to James Ellroy)?

News roundup: AliveCor launches FDA-cleared Kardia 12L ECG, eVisit buys UPMC’s inpatient teleconsult, UPMC and MedStar invest; NeueHealth gains $150M loan–with caveats–and NYSE non-compliance notice

June 26, 2024 | by

AliveCor shrinks 12-lead ECG to a single cable with AI-assisted detection for 35 cardiac determinations. The just-cleared by FDA system for clinicians combines the Kardia 12L ECG System (left), a single cable with five electrodes that acquires 8 high-quality diagnostic bandwidth leads, with the KAI 12L AI-assisted diagnostic technology. KAI uses a deep neural network-machine learning AI model to interpret ECG data acquired and validated on more than 1.75 million ECGs from leading US medical centers. It can make 35 cardiac determinations–14 arrhythmias and 21 morphologies–that include acute myocardial infarction (MI) and the most common types of cardiac ischemia. The Kardia 12L is battery-powered, weighs about 1/3 of a pound, and fits into a typical lab coat pocket.

12-lead ECG is considered the standard of ECG readings. A pocket system of this type puts this in reach of clinics, rural health, urgent care offices, and employer clinics. It requires minimal self-guided training and doesn’t require patients to fully disrobe. Release, Mass Device

Telehealth provider eVisit acquiring UPMC’s inpatient teleconsult technology–along with investments from UPMC and MedStar Health. This ‘hat trick’ adds hospital inpatient telehealth capability to eVisit’s health system-focused telehealth triage, provider-to-provider consults, and scheduled telehealth visits. The teleconsults serve inpatient care across five services: stroke, neurology, critical care, psychology, and toxicology. Both UPMC and current client MedStar Health (from the 2023 Bluestream Health acquisition, TTA 27 Apr 2023) are also investing in eVisit, adding an undisclosed amount to eVisit’s 2021 $45 million Series B. (Another way of saying ‘unlettered raise’?) Release, FierceHealthcare

And would this month be complete without items from the Dean of Dodging Disaster, Creating its Own New Reality, the one and only NeueHealth? The first is that Hercules Capital is giving them a second term loan facility (Loan and Security Agreement) of up to $150 million over three years that is, to be polite, hedged with qualifications. 

  • Tranche #1 is available on closing: $30 million
  • Tranche #2, $25 million, will be available only for a limited time– 10 November through 31 December 2024. It is also dependent on Molina making its final payment to NeueHealth for the Medicare Advantage plans they bought–a payment dependent in turn on those plans achieving plan performance ratings ( the “2025 Stars Condition”).
  • Tranche #3 of $45 million will be available from 5 February 2025 to 15 September 2025. But it is contingent after paying off what is owed in connection with the ACO REACH Model for performance years 2023 and earlier, payment in full of the CMS Settlement (as defined in the Loan and Security Agreement) and the Company having at least $22.5 million of unrestricted cash and cash equivalents.
  • Tranche #4: up to $50.0 million and available until 21 June 2027
  • The loan matures on 1 June 2028

Release 24 June, SEC Form 8-K, FierceHealthcare

The second is that the loan could not have come at a more needed time, as NeueHealth received a non-compliance notice from the NYSE on 16 June. It fell below an average market capitalization of $50 million for 30 consecutive trading days, with their last reported stockholders’ equity also below $50 million. It has 45 days to submit a business plan to remedy it within 18 months. NeueHealth’s preferred stock had a value of $920.4 million as of 31 March 2024 but is excluded from the NYSE calculations of common stockholder equity. NeueHealth closed today at $5.23.

This is in addition to a $30 million loan from current 60% majority shareholder NEA [TTA 16 Apr].

Along with tying Gordian knots masterfully and playing multiple ends against the middle, one wonders what management does all day at their new offices in Doral, Florida? Avoiding Chapter 11? Golfing? Surfing?

A Gimlet Eye view on IPOs and Cracked SPACs: Altaris buys Sharecare for $518M, takes it private; a look at Waystar and Tempus AI post-IPO

June 26, 2024 | by

Gimlet EyeSharecare finally gets itself bought and taken private, less than three years after its SPAC. One-time health tech darling Sharecare, now a patient navigation and employee benefits platform and once valued at $3.9 billion, will be acquired by healthcare-focused private equity company Altaris LLC for $1.43 in cash per share, or about $518 million. The shares on the buy date, 20 June, were trading at $0.77 so the offer is about an 86% premium, though shares are now trading at around $1,38. (Notably, Sharecare was below the $1.00 threshold for Nasdaq since February.) The transaction is expected to close in Q2 subject to formal shareholder approval and regulatory agencies. In terms of management, the executive team is expected to continue at least for now, with founder Jeff Arnold voting his shares in favor of the transaction and continuing as a shareholder. Release, FierceHealthcare, Mobihealthnews

Founded in 2010 by WebMD founder Jeff Arnold and celebrity doc/former political candidate Dr. Mehmet Oz, Sharecare had IPO’d a decade later via a SPAC, Falcon Capital Acquisition Corporation. It announced in February 2021’s Pandemic Palmy Days then hit markets on 2 July. At that time as essentially a personal care management app, it debuted at above $9.00 and received $571 million in gross proceeds with a reported valuation of $3.9 billion. A month later, it acquired CareLinx, an on-demand home care provider, from Europ Assistance in a $65 million cash/shares deal. By late 2021, Sharecare entered the Cracked SPAC Track as shares cratered. Dr. Oz is no longer on the board of directors or the advisory board. As share values fell precipitously, in November 2023 Mr. Arnold turned over the CEO reins to Brent Layton, a 20+ year Centene veteran and its retired president, picking him from the BOD and moving to chairman.

Shortly thereafter, Fruit Street sued Sharecare, a former partner, for $25 million charging that their diabetes prevention program (DPP) was supplanted by Sharecare’s own, breaching their contract and appropriating intellectual property. [TTA 14 Dec 2023] This suit is apparently still wending its way through the infamous Fulton County, Georgia courts. Sharecare also faced an escalating number of shareholder class action lawsuits alleging false and misleading statements on their financial condition (KRON 4).

What can we learn from IPOs as they are reviving? The first, of course, is that SPACs have gone the way of the dodo and passenger pigeon. The second is that there are quality IPOs, and then there are the ones to watch out for even if you are not an investor.

Remember first and foremost that VC and PE investors want to exit, profitably. And quickly. Exit=Sell to Someone Else. “Someone else” can be an IPO or another investor. An IPO means offloading the risk to the investing public. Please do keep in mind that what follows 1) is not investment advice, only observations and 2) your Editor is only a marketer, but one who has seen investments go up, down, and sideways since her days at the Frank Lorenzo School of Airline (Mis)Management, a/k/a New York Air (right, below) including a year observing up front and personally the dismal fate of Eastern Airlines. (Somewhere she has her old Texas Air share certificates…)

The investment scene in health tech and AI strongly resembles the Wild West days of airlines post-deregulation 30 years ago. Investor money in, now fleeing for the exits, whether the bankruptcy court or passing the hot potato to others with money.

Waystar IPO’d earlier this month at $21.50 per share. Checking in today, it’s trading at $21.55, essentially in a narrow and flat trading range in a down market. The IPO gave Waystar a fully diluted valuation of $3.69 billion. It’s early days, but three factors in favor of WAY staying the course at least short term are:

  1. They waited to IPO for the better part of a year and pulled it back when their initial valuation of $8 billion made Mr. Market ROTFL.
  2. Their investors have held on tight: EQT AB, Canada Pension Plan Investment Board (CPPIB), and Bain Capital will beneficially own approximately 29.2%, 22.3%, and 16.8%, which is over 68% of the company.
  3. They occupy a boring part of healthcare and aren’t new kids on the block. Payments and revenue cycle management (RCM) aren’t sexy or trendy. Waystar is the combination of ZirMed (1999) and Navicure (2001) which merged and renamed in 2018. 

The downsides: Competition. Lots of it. The usual unprofitability. Waystar lost money the past two years. Last quarter, those losses accelerated (Google Finance). Will that show up later this year in share price?

Tempus AI also IPO’d mid-month at an eyewatering $37/share, at the top of its offering range, and a valuation in excess of $6 billion. It’s AI! It’s backed by Google! And it rose 15% on its first day of trading, 14 June! Precision Medicine! Intelligent Diagnostics!

But where are shares today on 26 June? It closed yesterday at $24.96. That’s a downer of 32% from the IPO price–38% if you take it against the first-day close above $40. I’m sure the first-day investors, unless they have cast-iron stomachs, have already reached for the antacids.

So what’s going on here? Tempus AI’s business combines AI for data analytics and a vast database to guide doctors in therapy and treatment, identify clinical trials, guide treatments, and close gaps in care. The analysis is done on blood samples, buccal swabs, and liquid tests. It’s a familiar pitch that multiple companies are using around AI and their ‘vast databases’ from the time of IBM Watson’s lofty ambitions.

  • Their CEO has already traversed the hype circuit. “We’re on a really good trajectory,” Tempus AI CEO Eric Lefkofsky, the founder of Groupon, said on CNBC’s “Squawk Box” Friday morning before shares started trading. “As revenues have been growing quickly, we’re not investing all that gross profit dollar growth back into the business. We’re generating improved leverage every quarter.” (Exactly what does that mean? Probably that money is sent down to the profit line.) Setting expectations–within the next year, the company is expected to be cash flow and EBITDA positive within the next year. It’s twice been on CNBC’s Disruptor 50 list of private companies which historically has been a mixed bag.
  • In their favor is that they already have as of today 510(k) clearance from FDA for its Tempus ECG-AF device to identify patients who may be at increased risk of atrial fibrillation/flutter (AF). It’s the first FDA clearance for an AF indication in the category known as “cardiovascular machine learning-based notification software”. But it needs to be integrated into resting 12-lead ECG recordings collected at a healthcare facility and analyzed against other patient data. What is that timeline and market?
  • Tempus has already survived and evolved from one major pivot. Looking back, they started in the genomic testing business in 2015, primarily concentrating on oncology. In 2020, it branched out to then-trendy Covid-19.  CNBC 17 June 2020  Genomics is now subsumed on the site by terms such as pharmacogenomics (PGx) coupled with patient-reported outcome (PRO) software.

Investors up to the IPO were listed as Google, Baillie Gifford, Franklin Templeton, NEA, Softbank, and T. Rowe Price. Who’s sticking around? The underwriters are Morgan Stanley, JP Morgan, Bank of America Securities, and Allen & Company. Reuters  Customers include AstraZeneca and GSK (GSK.L). One of its competitors, Guardant Health, which has patents in DNA blood testing for cancer, is suing on infringement on five patents. Reuters

All in all, Tempus AI started off way high–and there is only one way to go from there. They have a great story and a potentially good business, but it bears watching, not investing, at this point.

Week-end short takes: Change Healthcare/UHG breach notification starting (updated); fundings for Pomelo Care, Marigold Health, Humata Health

June 21, 2024 | by

Change Healthcare finally starting notifications, but not yet to consumers. A press statement today from Change/UnitedHealth Group confirmed that the long process of notifications has started with hospitals, insurers, and other customers. Individuals and practices will not be notified until late July. Change confirmed that the Blackcat/ALPHV cyberattack exposed names, addresses, health insurance information, and personal information like Social Security numbers, but at the individual level investigation isn’t finalized. At this point, they have reviewed over 90% of impacted files and have not seen signs that doctors’ charts or full medical histories were taken. Technically, UHG has made the 21 June deadline stated in the Hassan/Blackburn Senate letter [TTA 19 June] but not within the 60-day HHS-OCR window, which opens them up to an HHS fine. After paying a cyberransom of $22 million in bitcoin and uncounted (to us) millions in rebuilding systems, HHS’ fine may look like the lesser cost of doing business. The Change website also contains a very carefully worded ‘HIPAA Substitute Notice’ that reads like a consumer data breach notification. AP via Yahoo! News UK   One wonders if there’s a fair amount of ‘buyer’s regret’ going on at UHG in fighting so hard to buy Change. Due diligence would have helped over that year-plus.

Update: The Centers for Medicare & Medicaid Services (CMS) announced earlier this week that the provider financial assistance program will be ending 12 July as billing activities have largely resumed. It has advanced over $2.55 billion in payments to Medicare Part A providers and $717.2 million to Part B providers. FierceHealthcare

Fundings this week:

Virtual maternity support platform Pomelo Care scored $46 million in Series B funding. Lead investors are Andreessen Horowitz (a16z) and First Round Capital with participation from Stripes, BoxGroup, Operator Partners, and SV Angel. Pomelo’s markets for virtual fertility, pregnancy and newborn care from preconception through a baby’s first year services are employers, health plans and providers. The company claims 3 million covered lives across 46 states through their commercial and Medicaid health plan partners. Release, Mobihealthnews

Telemental health provider Marigold Health now has an $11 million Series A. Marigold is structured as an anonymous social network where people with mental health and substance use conditions provide peer-based support. Lead investors for the Series A are Rock Health and Innospark Ventures. Additional participants are the Commonwealth Care Alliance (CCA), Wavemaker360, Stand Together Ventures Lab, Epsilon Health Investors, Koa Labs, VNS Health Plan and KdT Ventures. Their substance use disorder (SUD) programs are currently available to 25,000 members in Delaware, Rhode Island, and Massachusetts. The new funding will be used for expansion to at least four additional states by the end of 2025. Release (Marketwatch), Mobihealthnews

Humata Health, which has developed AI-based technology to automate prior authorizations for payers and providers, closed an unlettered $25 million funding round. Lead investors are Blue Venture Fund (representing the majority of BCBS plans) and LRVHealth (representing nearly 30 health systems and payers), with participation from Optum Ventures, .406 Ventures, Highmark Ventures, and VentureforGood. The funding will be used to broaden its generative AI technologies, expand their provider base, and begin to partner with payers and delegated entities. Humata bought the base prior authorization technology from Olive AI out of its bankruptcy [TTA 31 Oct 2023]. Its founding chairman and CEO is Jeremy Friese, MD, who had been Olive AI’s president for their payer business after selling Verata Health, also in the prior authorization automation area, to Olive.  Release, FierceHealthcare

A lighter update: Pepper the Robot’s comeback at San Diego State University–now AI-equipped for mental health

June 21, 2024 | by

Our old friend Pepper and sidekick Bernard are back…this time with AI. A new research initiative at San Diego State University’s James Silberrad Brown Center for Artificial Intelligence (JSBAIC) is equipping Pepper (left, SDSU photo) and Bernard (right, file photo) with AI capabilities targeted to early recognition of mental health concerns.  The JSBAIC, with the help of a $5 million grant from the James Silberrad Brown Foundation, has already equipped Pepper with functionality that can recognize changes in emotional states, such as speech patterns, voice pitch, or even eye pupils. The purpose would be to assist clinicians with a robotic early warning system for a potential mental health episode. JSBAIC researchers are working with Sharp HealthCare in San Diego (also a beneficiary of the Brown Foundation) in a clinical trial focusing on children with bipolar disorder. The JSBAIC is a spinoff from SDSU’s Fowler School of Business’ Management Information Systems area. JSBAIC interview with NBC San Diego, Daily Aztec  Hat tip to HIStalk 6/19/24

Pepper and Bernard were originally created by Aldebaran Robotics (now Softbank). TTA has been following their development since at least 2016 when tested as robotic greeters at the Ostend, Belgium AZ Damiaan hospital. Softbank is actively marketing Pepper for uses in healthcare, education, hospitality, banking, and retail. Bernard (NAO) is a personal teaching assistant. Pepper has also appeared before the House of Commons select committee on education [left, TTA 25 Oct 2018] to mixed reviews and earlier fainted during a star turn at CES.

 

 

 

News roundup: VA extends Oracle Cerner for 11 months; Amwell founders swap jobs; Alphabet’s Verily pivots to Lightpath with GLP-1, retiring Onduo; UnitedHealth hasn’t notified on Change breach

June 20, 2024 | by

To no one’s surprise, the Department of Veterans Affairs (VA) extended its contract with Oracle Cerner for another 11 months. This is per the new contract relationship that started last year, resetting from the original five-year contract that started in 2018 to five one-year terms, with mandatory annual reviews and renewals [TTA 18 May 2023]. Technically, the contract expired in May but VA extended it for one month as discussions continued over the next one-year term. This second option period expiring May 2025, according to the VA release, is focused on the following for the EHR modernization (EHRM):

  • Supporting the existing six facilities with the Oracle Cerner EHR
  • Achieving the goals of the reset and driving towards future deployments
  • Increased accountability across a variety of key areas, including minimizing outages and incidents, resolving clinician requests, improving interoperability with other health care systems, and increasing interoperability with other applications to ensure an integrated health care experience
  • Supporting value-added services, such as system improvements and optimizations
  • Achieving better predictability in hosting, deployment, and sustainment
  • Fiscal responsibility 

The plan is to resume site deployments in FY 2025, likely in year 2025, after reset goals are met. Seema Verma, Oracle Health’s new executive vice president and general manager, said that “VA’s intent to resume deployments in the next fiscal year is a significant milestone that reflects the hard work our collective teams have done to improve the system today, as well as confidence in our shared ability to continually evolve the EHR over time to meet the needs of both practitioners and patients.” NextGov/FCW, FierceHealthcare, Healthcare Dive, Oracle release

Is there much choice for the VA in the matter? Not really. VistA can be updated but remains non-interoperable with the Military Health System’s (MHS) Cerner-Leidos EHR. But can Oracle Cerner be fixed up and debugged to work for VA’s vastly different needs and smoothly deployed within the contract duration? That jury is still out in the view of the VA and Congress.

The Brothers Schoenberg swap positions at Amwell. Roy Schoenberg, MD, MPH, will transition immediately from his role as president and co-CEO to move to executive vice chairman of Amwell’s board of directors. Ido Schoenberg, MD, will become the sole CEO. The brothers co-founded the company in 2006. Ido’s quote closing the release is interesting in demonstrating the shift from investment without profits to getting on the path to profitability:  “This transition represents a natural evolution for our company as we shift from a period of intense R&D investment to an operational focus aimed at achieving greater efficiencies, optimizing cash flow and delivering profitable growth while maintaining our dedication to enabling our clients’ aspirations.” Roy is credited with developing Converge which is their next-generation integrated platform. If Teladoc is finding it difficult to transition from the stand-alone, transactional, urgent care service they and Amwell pioneered, into an evolved market that has incorporated virtual capabilities into multiple types of care models, whither Amwell’s future? More thoughts in TTA 2 May, 9 April

Alphabet (Google)’s once-visionary Verily now jumps on the GLP-1 bandwagon with Lightpath. Verily’s latest pivot to the highly trendy weight loss area is termed as a metabolic solution as part of a “personalized chronic care solution for health plans and members”.  Lightpath will start as Lightpath Metabolic, a four-part program that includes Metabolic Intensive (diabetes management), Weight Loss Intensive, Metabolic Improvement, and Metabolic Achievement. The Verily platform integrates data from health records, connected devices, and other care points to deliver “personalized pathways, suggestions, and nudges to health plan members” virtually along with health coaches and an advanced licensed clinical team. The current virtual chronic care management platform, Onduo, will be retired by 2025.

Once upon a time (2021, sigh), Verily was Google’s skunk works for advanced health tech with Google Health being the marketing and merchandising arm for clinical and consumer products. Google Health was broken up in August 2021 and Verily faded into the Alphabet background with the occasional joint venture and clinical pilots, with Onduo being their most marketable product. Google seems to have little direction for Verily other than to keep it alive. And given the competition plus a greater understanding of the long term effects of the GLP-1 drugs in the weight loss area, the GLP bandwagon is up for a shaky ride in the next year. Release, FierceHealthcare

And very strangely, UnitedHealth Group hasn’t notified Health and Human Services’ Office of Civil Rights (HHS-OCR) about the ransomware data breach at Change Healthcare, nor the individuals affected. The notification to OCR is required under HIPAA to be within 60 days of the date of the incident. UHG is over the deadline by two months, calculating from 21 February. CEO Andrew Witty wilted before double-barreled Senate and House hearings in May and UHG lost a fight to put the notifications for the breach onto providers [TTA 5 June]. Senators Margaret Wood Hassan (D-NH) and Marsha Blackburn (R-TN) sent a joint letter on 7 June to Andrew Witty, CEO of UnitedHealth Group, urging him to send a breach notification letter that notifies OCR, state regulators, Congress, the media, and health care providers that it intends to complete all breach notifications on behalf of all HIPAA-covered entities, individuals and businesses affected, by 21 June. That’s Friday. UHG continues to maintain that they still do not know the extent of the breach. The Medical Group Management Association (MGMA) also sent a letter to Mr. Witty on 12 June.  Don’t hold your breath for UHG sending millions of letters. Becker’s, HealthExec

Done CEO, president arrested, charged with $100M fraud on Adderall distribution in first Federal case on telemedicine prescribing (updated)

June 19, 2024 | by | 1 Comment

Done effectively done at the C-level, but not done in business yet. Last Thursday, Ruthia He, the founder/CEO, and David Brody, listed as the clinical president of Done Global (Done), were arrested in California on a Federal indictment filed in the US District Court for the Northern District of California. They are charged with providing easy online teleprescription access to Adderall and other Schedule II stimulants through patients paying a monthly subscription fee and skirted the normal restrictions provided in the Controlled Substances Act (CSA) and other regulations. By providing easy access and raising subscription fees, He and Brody are charged with generating over $100 million in revenue by arranging for the prescription of over 40 million pills from 2020 into 2023, during the pandemic when the Ryan Haight requirements were temporarily suspended by the DEA. 

Given the multiple counts of conspiracy to distribute controlled substances and distribution of controlled substances, the charges may earn them a maximum 20 years in Federal prison. One would also expect a clawback of payments made by subscribers, health plans, and Federal programs. The latter two, according to the DOJ release, amount to $14 million alone.

The Done indictment is the first Federal prosecution of criminal drug distribution related to telemedicine prescribing by a digital health company. In the 2020-2023 period, Done was a seed stage company, cited in the indictment as misrepresenting its size. Its current backers are Craft Ventures, F7 Ventures, and Offline Ventures but no additional rounds are listed on Crunchbase or other sources. He was a former product designer at Facebook and she was involved as an investor in or founder of various startups before Done according to her LinkedIn profile. David Brody, MD, is a psychiatrist listed as the chief medical officer of Connectix Health and as a self-employed consultant in Collaboration Care, with no reference to a position at Done. 

According to the Department of Justice release, He and Brody:

  • Targeted drug-seeking users through social media buys in the tens of millions of dollars.
  • Intentionally structured the Done platform to facilitate access to Adderall and other stimulants. This is evident from their current website which emphasizes ADHD. 
  • Instructed Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify or they were not medically necessary. They also mandated that initial encounters would be under 30 minutes. 
  • He put into place a monthly auto-refill function for subscribers without further check-ins.
  • Discouraged Done prescribers from follow-up care. The compensation structure for prescribers solely paid on the number of patients receiving prescriptions–not for medical visits, telemedicine consults, or time spent after the initial consult.  
  • Conspired to defraud pharmacies, Medicare, Medicaid, and commercial insurers by dispensing Adderall and other stimulants to Done members, who also continued to pay subscription fees.

Further, “He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died.” 

Done was singled out in June of 2022 when Cerebral was facing Federal investigation and a grand jury subpoena, actions that continue today but haven’t proceeded to an indictment. At that time, Truepill (also under DEA scrutiny on Schedule II, TTA 22 Dec 2022), CVS, and Walmart Health refused to fill prescriptions by both Cerebral and Done. With Cerebral facing investigation, Done wasn’t far behind. By September 2022, according to The Wall Street Journal, Done was being investigated by the Drug Enforcement Agency (DEA). The Verge

He and Brody are charged with reacting to that investigation by obstructing justice: deleting documents and other communications, encrypting their messages versus using company email, and failing to produce documents to a Federal grand jury.

Despite Cerebral’s far higher profile and volume, even with an ongoing investigation not only on prescribing but also on ad trackers [TTA 9 Feb 2023], the prosecution of Done’s head executives on criminal drug distribution charges is the first brought by the Justice Department against a digital health company for violations related to the CSA and drug prescribing regulations plus fraud.

In this Editor’s view, the relaxation of teleprescribing Schedule II drugs for three years invited abuse. Done may be the first, but it won’t be the last. See the prediction 8 July 2022 made by a former state ADA that both the Feds and states won’t stop at prescribing but will go on to telehealth billing (scroll to last item).

Done has not made any statements directly to press to date, save a short statement on their website:

Done Global strongly disagrees with the criminal charges filed last week against our founder, Ruthia He, and Dr. David Brody, which are based on events that principally occurred between February 2020 and January 2023. Since our founding, Done Global has worked to make mental health care accessible for tens of thousands of Americans trapped in a spiraling national crisis. Done Global will continue to operate – and do everything in our power to ensure that tens of thousands Americans that rely on us do not lose access to their mental health care. At the same time, we will continue to support our clinicians as they exercise independent clinical judgment, practice evidence-based medicine, and provide best-in-class health care.

Update: This statement has been expanded since our original article. Notably, the company declares that “Done is fully aligned with the Drug Enforcement Administration and the Department of Justice on eliminating drug abuse in America” and that they have protocols in place to prevent abuse. Done is also committed to continuing normal operations. Full text is here. David Brody is still listed as clinical president on the medical team page. Ruthia He is not listed on the website at all nor are other company leaders. Press releases posted on the site end in 2022.

Mobihealthnews and Fierce Healthcare essentially recap the DOJ release. The Verge includes the text of the 22-page indictment at the end of their article. 

Editor’s Note: On 30 May, TTA included a Perspectives article on collaborative care authored by Sussan Nwogwugwu, DNP, PMHNP, Clinical Leader at Done. This contributed article was non-promotional and primarily about alleviating clinician burnout. It briefly mentions technology in telehealth with one mention of ADHD as an example.

UK pathology services Synnovis hacked by Qilin ransomwareistes, demand $50M, justify attack due to UK involvement in “wars”

June 19, 2024 | by

Pathology services provider Synnovis ransomwared, services continue to be disrupted. The Bloomberg report states that the Russia-based ransomware group Qilin is demanding a $50 million payment, in exchange for a code to unlock affected computers and software, which is the usual M.O. The ‘or else’ is that the hackers will post online the patient data stolen in the attack, according to a ‘spokesman’ quoted by Bloomberg, using a messaging account associated with the Qilin gang. FTA:

  • “A representative for the hackers said that they were very sorry for the people who suffered, but refused to accept responsibility for the human cost.”
  • Qilin is no longer in contact with Synnovis since the ransom wasn’t paid within their 120-hour deadline
  • The vulnerability to gain access to the Synnovis computers/software was not disclosed, but is known as a “zero day”. This could not be independently verified by Bloomberg.

Synnovis partners in pathology services with two London-based hospital trusts, King’s College Hospital, Guy’s and St Thomas’, including the Royal Brompton and the Evelina London Children’s Hospital. GP services affected are in the boroughs of Bexley, Greenwich, Lewisham, Bromley, Southwark and Lambeth. The incident started on 3 June and was announced 4 June. This affected patient tests such as blood, bowel and various swabs that are routine and needed in EDs and surgeries, causing mass reschedulings and diversion of services. TTA 5 June

Procedures continue to be disrupted according to Synnovis’ own Monday update.“We have delivered temporary workarounds including the redirection of non-urgent blood tests and result processing to other pathology labs to allow us to focus on urgent samples received from GPs, to ensure there is sufficient capacity for urgent testing and to respond to the highest priority cases at St Thomas’ Hospital and King’s College Hospital. Changes to processing of testing and results are being communicated directly to GPs and other service users to ensure a smooth transition.” Their analyzers are back online. There is no timetable for full restoration of services.

Synnovis states that they are continuing to work with law enforcement and the UK Information Commissioner, as well as the National Cyber Security Centre (NCSC) and NHS England’s (NHSE) Cyber Operations Team. This story will be updated with further developments.